-63-
reflecting preexisting restrictions imposed upon foreign exchange
by South Africa). Accordingly, we will present the analyses of
the parties' experts regarding the effect of the 12-year
restriction.
Respondent argues that assuming arguendo petitioner realized
a loss as a result of its debt-equity conversion, the loss did not
exceed 10 percent of its investment (approximately $1.25 million)
on account of the 12-year restriction. This argument is based
upon the report and testimony of respondent's expert, Dr. William
R. Cline. Dr. Cline received a Ph.D. in economics from Yale
University in 1969, is a senior fellow at the Institute for
International Economics, and has approximately 25 years'
experience in the area of international debt, particularly Latin
American and Brazilian debt. Dr. Cline concluded that petitioner
realized no loss on its debt-equity conversion. However, he
recognized that petitioner may be entitled to a small discount on
the fair market value of the cruzados it received, attributable to
its agreement to maintain its equity investment in Brazil for 12
years, despite its creation of MOIL and MRC in order to minimize
the effects of the 12-year restriction.
Dr. Cline determined a discount on account of the restriction
by considering the spread between the interest rates on a 3-month
U.S. Treasury bill and a 10-year U.S. Treasury bond between 1964
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